BUSINESS

Former PSU honchos lead the private sector

By Rakteem Katakey in New Delhi
January 22, 2008 11:19 IST

Reliance Industries' crude oil refinery in Gujarat and overseas crude oil exploration, Essar's refinery at Vadinar, the Hinduja group's oil and gas ambitions, BHP Billiton's India business and LN Mittal's ever-increasing global steel footprint have one thing in common - these are all driven by former public sector CEOs.

With Indian business houses embarking on large projects, retired public sector CEOs are in big demand.

They might not be too young but they can be found at strategic positions across a spectrum of sectors, overseeing investments running into billions of dollars. Talent-starved India Inc is looking at the public sector to steer its ambitions.

Thus, former ONGC Chairman and Managing Director Subir Raha (2001-06) is the Executive Vice-Chairman of the Hinduja group. He is at the forefront of the group's proposed $10 billion foray into the Iranian oil and gas sector.

Atul Chandra, the former Managing Director of ONGC Videsh Ltd (1996-2003), is President (international operations) of Reliance Industries.

MS Ramachandran, the previous IOC honcho (2002-05) is the Chairman of mining major BHP Billiton in India. The company is seeking a foothold in the country's rich mining sector. His predecessor, MA Pathan (1997-2002), is the Chairman of Tata Petrodyne, the oil and gas exploration arm of the Tatas.

And it is not just CEOs of oil sector PSUs who are in demand. VS Jain, who last year retired as the Chairman of Steel Authority of India Ltd, was till recently the CEO of Jindal Stainless. Another SAIL chairman, MRR Nair (1992-96), went on to head LN Mittal's venture in Mexico.

Vikrant Gujral, who was the Managing Director of SAIL's Bhilai steel plant and the Chairman of Indian Iron & Steel Company, is the Vice-Chairman and CEO of Jindal Steel and Power Ltd.

He is widely regarded as the man behind the company's recent stunning acquisition of mines in Bolivia for $2 billion. Sanak Mishra, the CEO of Arcelor Mittal in India, is the former Managing Director of SAIL's Rourkela steel plant.

Former BHEL Chairman KG Ramachandran (1998-2003) is the head of Infosys' HRD Institute. Narinder Sharma, former MTNL Chairman, had earlier joined Reliance Communications, while a host of other telecom PSU chiefs are consultants and advisers to various companies.

Narinder Sharma and others have no reason to complain. "They are giving us an opportunity to work after 60. We need the continuity," says Raha. Of course, their current salaries are in multiples of what they got as public sector CEOs.

Head-hunters say the supply of CEOs is way short of the demand, thanks to the breakneck pace at which Indian companies are growing.

Experts say there is a demand for over 300 CEOs in the market today. The shortage is showing in CEO compensation as well - there are close to 75 CEOs with annual packages in excess of a million dollars in the country today.

In addition, it is only in the last few years that the Indian private sector has started investing in large projects, with the exception of Reliance Industries.

As a result, the talent pool available within the private sector to execute such projects is really small. Public sector companies, on the other hand, have for long made large investments in areas like energy, steel and telecommunications. As a result, their CEOs have the managerial expertise to run large projects.

Last but not the least, most public sector CEOs are good at handling government relations, which is important for private companies given the plethora of clearances still required for core sector projects.

"Their ability to negotiate through bureaucracy is vital," says K Sudarshan, Managing Partner of head-hunting firm EMA Partners (India).

On their part, the public sector CEOs discount the importance of their knowledge of the government's workings and contacts.

"The frequent presence of former public sector officials in government offices tends to undermine the company's position in the government," says an official who works with a global coal company.

Rakteem Katakey in New Delhi
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